Abstract : Former Director of the Digital Currency Institute at the People’s Bank of China claimed that central bank digital currency plays an important role in optimizing the payment function of existing fiat currencies.
March 14 (ChainDD) In his op-ed article Central Bank Digital Currency’s Issuance Design and its Optimization for Monetary System published on Jinrongjie.com, a news outlet of China Finance Online Co., Yao Qian, manager of China Securities Depository and Clearing Corporation Limited and former Director of the Digital Currency Institute at the People’s Bank of China (PBoC), discussed disadvantages of the existing monetary system and claimed that central bank digital currency (CBDC) plays an important role in optimizing the payment function of existing fiat currencies.
According to Yao, on one hand, CBDC allows the private sector less rely on payment services, so as to reduce regulatory burden and pressure of the central bank and reinforce authority of existing fiat currencies.
On the other hand, to issue CBDC can address difficulties the modern monetary policy is facing, namely, inefficiency of monetary policy transmission, difficulty in countercyclical adjustments, and shortage in management of policy expectation and the flow of money from the real economy to the virtual economy.
On the basis of such viewpoints, Yao studied issuance mechanism of CBDC and pointed out the issuance should have economic state contingency, which is the key feature for CBDC to help the modern monetary policy step out of its difficulties.